ECB's Nowotny plays down worries on euro rate

Published February 18, 2013

Reuters

VIENNA – The euro's exchange rate should not be dramatized, European Central Bank policymaker Ewald Nowotny said on Monday, saying the currency was moving within standard ranges and growth in the euro zone should start to pick up again soon.

"The dollar/euro exchange rate is moving in a range we have had before. We have had no special developments. There is a euro appreciation against the yen but not to a dramatic extent," he told reporters.

"That means if it stays likes this we are having a sham discussion," he added, calling talk of a currency war - amid market perceptions that many central banks are trying to cheapen their currencies - "absolutely unnecessary".

He reiterated that the ECB, which targets price stability rather than exchange rates, had no need to intervene.

Nowotny, who is also head of the Austrian National Bank, said the central bank still assumed the euro zone economy would reach its low point in the first quarter of this year and then gradually recover, although there were big discrepancies in growth rates among members and the outlook could still be revised down.

He thought the Austrian economy would also touch bottom this quarter and could grow a real 0.6 percent to 0.7 percent this year, slightly better than forecast in December.

Nowotny noted that the ECB did not decide on Ireland's ability to relieve its debt burden by spreading out payments to its central bank over more years, but added: "As an outsider I see this as a reasonable solution that was made here", not least because the ECB had advised against involving investors in Ireland's debt resolution efforts.